GASB Update 2020 NCGFOA Spring Conference Presented by
GASB Update 2020 NCGFOA Spring Conference Presented by Gregory S. Allison Teaching Professor
Quick Session Overview • GASB Statement No. 84, Fiduciary Funds • Other GASB projects that are looming • Review of the reporting model and related projects’ timelines
GASB Statement No. 84 Fiduciary Activities
Fiduciary Fund Reporting • Fiduciary fund types for legally entrusted arrangements – Pension (and other employee benefit) trust funds • Pension plans • OPEB trust • Fiduciary component units (e. g. , pensions that meet component unit criteria as per GASB Statement No. 14, The Financial Reporting Entity)
Fiduciary Fund Reporting (cont. ) • Investment trust funds – external investment pools • Private-purpose trust funds – Legally entrusted assets that are not pension or OPEB assets – Government named as trustee but not the beneficiary – May be expendable or nonexpendable in nature
Fiduciary Fund Reporting (cont. ) • Fiduciary fund type for such activities not legally entrusted – Custodial funds • Such funds may have equity
When are activities other than Pensions/OPEB considered to be fiduciary? • When the following are all met: – The assets are controlled by the government • When the government holds the assets, and • When the government has the ability to direct the use of the assets – The assets are not derived from either • Own-source revenues (solely), OR • Government-mandated or voluntary nonexchange transactions
When. . ? (cont. ) – The assets have one or more of the following characteristics • Assets are administered through a trust, dedicated to providing benefits according to specified terms, and legally protected from creditors • Assets are for the benefit of individuals and the government does NOT have administrative involvement
Examples of Non-Pension/OPEB Fiduciary Activities? • Custodian of cash collected from fees charged by a cemetery association (not a component unit); activity administered through a trust the city maintains – Yes, should be reported as fiduciary activity • City-hired contractor pays a cash deposit for assurance; city takes custody of the deposit – No, the cash is for the city’s benefit
Examples (cont. ) • City-hired contractor provides a performance bond instead of cash deposit – No, still for the city’s benefit • Retainage held by government during a construction project – No, for the government’s benefit • Inmate funds held by a county government – Yes, the funds belong to the inmate and the government does not determine how they are used
Examples (cont. ) • Tax withholding held, as well as the employer’s share – No, ultimately an obligation of the government that they cannot avoid
GASB Project Being Finalized • Defined contribution plans would be exempt when the entity does not control the asset (as is currently done in NC) • 457 plans and 401 K plans would remain the way they are now and not reported as a fiduciary activity
Fiduciary Financial Statements • Statement of Fiduciary Net Position • Statement of Changes in Fiduciary Net Position • Prepared on economic resources measurement focus, accrual basis of accounting
Implementation Date • Implementation Guide 2019 -2, Fiduciary Activities, released in June 2019 • Fiscal years that begin after December 15, 2018 (i. e. , FYE 6/30/20)
Recently Adopted Statements • GASB Statement No. 90, Majority Equity Interests – an amendment of GASB Statements No. 14 and No. 61 – Generally requires majority equity in a legally separate entity that isn’t defined as an investment should be report the separate entity as a component unit – If defined as an investment, it should be reported as such • FYE 6/30/20 (very limited impact)
Recent Statements (cont. ) • GASB Statement No. 91, Conduit Debt Obligations – Clarify existing definition of conduit debt obligations – Establish that a conduit debt obligation is not a liability – Establish accounting/reporting standards of commitments/voluntary commitments extended by issuers – Improve required relevant note disclosures • FYE 6/30/22
Recent Statements (cont. ) • GASB Statement No. 92, Omnibus 2020 – Clarifies effective date of GASB Statement No. 87 and related Implementation Guide – Intra-entity transfers related to OPEB plans – Application of GASB Statement No. 84 to certain OPEB arrangements – Measurement guidelines for liabilities related to asset retirement obligations • FYE 6/30/21 (limited applicability)
Reporting Model Timeline Update • Financial Reporting Model project – Exposure Draft anticipated June 2020 – Final standard February 2020 – Tentative implementation dates: • Fiscal years beginning after June 15, 2024 (FYE 2025) for larger governments • One year later for smaller governments • Parameters not determined as of yet
Timeline Update (cont. ) • Revenue and Expense Recognition – Preliminary Views anticipated May 2020 – Exposure Draft anticipated December 2021 – Final standard anticipated March 2023 – Implementation in concert with Reporting Model
- Slides: 19